Where next for EU Structural support to the fisheries sector? Some reflections Miguel Peña Castellot Structural Policy and Economic Analysis Unit, DG MARE/A-3 5th International Fisheries Conference Fisheries sector viability with and without support Tallin, 27 November 2015

The European Maritime and Fisheries Fund The EMFF is the structural support tool of the Common Fisheries Policy for the period The resources available for commitments are €5.75 billion under shared management and €647.3 million under direct management. €4.34 billion of the resources under shared management are allocated to the sustainable development of fisheries, aquaculture and fisheries areas, to marketing and processing. A further €1.1 billion is allocated to scientific advice, data collection and to control and inspection activities. Part of the integrated maritime policy is also covered. 2

The European Maritime and Fisheries Fund Two new, fundamental aspects to be outlined: Reinforced consistency between the CFP tools. The EMFF main aim is to contribute to achieving the CFP objectives. Increasing conditionality of support. On top of applicable general conditionalities, the EMFF includes 4 specific ex-ante conditionalities: – Fleet capacity report submitted and in accordance with Commission's guidelines. Capacity ceilings respected. – Multiannual national strategic plan on aquaculture – Availability of administrative for data collection & for control and inspection Most of the EMFF Operational Programmes have been adopted now. Execution can start in earnest. 3

The EMFF in Estonia Estonia's OP for the EMFF was adopted on 24 August The EMFF allocation is EUR 101 million (plus an additional EUR 28.6 million of national public funding). Estonia focuses the EMFF on fostering marketing and processing (24.43% of the allocation) and on increasing employment and territorial cohesion (23.4%). The allocation of funding to these union priorities is above the EU average. The rest goes to sustainable fisheries (19%), sustainable aquaculture (13.3%) and to fostering the implementation of the CFP (11.5%). EMFF allocations there are below the EU average. The allocation to the integrated maritime policy (2.5%) is above the EU average. Estonia plans to deliver close to 10% of its EMFF allocation through financial instruments, the largest % in the EU. 4

Looking ahead….. It is not too early to start thinking about the post-2020 period. Ex-post evaluation of the EFF has been launched and will be published in December Mid-term review of the EMFF will take place in 2016/2017. This will be a good time to take stock and start looking forward Performance framework will be analysed in New Better Regulation guidelines require better evaluation, more open public consultations and improved ongoing performance evaluation. The impact assessment process supporting a possible EMFF-2 is bound to start in Isolating the impacts of structural public support in the general evolution of the sector is challenging. Need to refine indicators and improve data coverage and quality. 5

Looking at the crystal ball….the expected context in The CFP has very clear environmental, economic and social objectives. Urgent need to deliver. No margin there. If the 2013 CFP reform achieves its environmental, economic and social objectives, by 2020 the fisheries sector should be in a much better position than now. Sustainable fishing should be the rule. Mortality levels should be consistent with MSY and the landing obligation will be in full motion. Fleet segments should be in balance with (increased) fishing opportunities too. The economics of the catching sector should also be much better than what they are in 2015; but profitability is and has been positive at the aggregate level for the last 4-5 years already. Our knowledge of the economics & the social fabric of the sector should be much better than now. That is the situation now but this could all change, e.g. lessons learned from the global economic crisis which began in 2008, fuel crisis, etc. 6

What have we learned from the EFF? 5 most used measures under the EFF ( ), from 2012 to The use of fleet measures declined during the implementation of the EFF. The uptake of fleet measures under the EMFF has also been lower than expected Is there room for fleet measures in the future? 7 31 July May May May 2015 Permanent cessation (19.61 %)Processing (17.41 %)Processing (16.65 %)Processing (17.53%) Aquaculture (12.98 %) Permanent cessation (17.25 %) Permanent cessation (15.44 %) Aquaculture (14.33%) Processing (12.79 %)Aquaculture (14.83 %)Aquaculture (14.43 %) Permanent cessation (13.98%) Fishing ports (10.89 %)Fishing ports (11.46 %)Fishing ports (11.61 %) Development of fisheries areas (11.47%) Temporary cessation (7.67 %)Temporary cessation (7.40 %) Development of fisheries areas (9.25 %) Fishing ports (11.15%)

What have we learned from the EFF? Aquaculture The aquaculture sector is profitable. Aquaculture measures were the second largest area of investment for the EFF : EUR 560 million of EFF funding plus EUR million of national public contribution. Some 60% of the operations under the EFF correspond to modernisation and extension of existing farms, 19% to aqua-environmental measures and 17.6% to new production capacity. Production capacity has increased, production has not not. Is this a result of the crisis? Marine aquaculture has taken the lead over shellfish and freshwater. Already now, EU support generates a significant leverage effect (EUR 1 : EUR 1,8 of national resources). Room for financial instruments? As for the EMFF, close to 12k projects are foreseen with an EMFF allocation of EUR 1.2 bn (+ over €500 million of public national resources). Under current projections, in the period close to EUR 2.5 bn of public resources would be invested in the sector. 8

What have we learned from the EFF? Aquaculture European Court of Auditors report confirmed that the emphasis has been too much on increasing production capacity as opposed to the value of production. A significant part of the problem lies with administrative obstacles and spatial planning issues. Any future public support would need to focus more on innovation and less on additional production capacity. For example, on new species, new feed with reduced fish protein, new production methods and new ways to increase animal health reducing dependence on veterinary medicine. Emphasis on multiannual national strategic plans. 9

What have we learned from the EFF? Processing & marketing The sector is profitable : EUR 1.06 billion of public resources invested (EUR 685 million EFF and the rest public national contributions). Marketing consumes a further EUR 228 million of public support. A further EUR 1.33 billion of private funding invested (ERDF funds also invested). The multiplier effect in processing is high: one euro of EFF generates EUR 2.49 of national contributions, of which EUR 1.95 are private resources and the rest are public, this is in line with multipliers in FI in the form of loans under the ERDF. 75% of the operations correspond to construction of new processing facilities or modernisation or extension of existing ones; 20% to the modernisation of marketing establishments and the rest to construction of marketing establishments. 10

What have we learned from the EFF? Processing & marketing Around 5% of the proposed EMFF projects concern processing or marketing. The allocation of EMFF resources to these two areas is big: EUR 1 billion (plus EUR 324 million of national public resources). In total, EUR 2.65 billion of public resources would be invested in processing & marketing in the period Under the EMFF, support for processing firms larger than SMEs can only be made through financial instruments. Extend to all firms in EMFF-2? 11

Sustainable development of fisheries areas After a slow start, Axis 4 gained importance under the EFF. By 31 May 2015, projects had been approved, 8.28% of the total number of projects and 11.47% of the EFF total commitments. Total costs amount to EUR 912 million, of which EUR million are public contributions. The EFF contributed with EUR million to the public part. Under the EMFF some EUR 519 million (plus EUR 170 public national) are allocated to this field. Should it be continued as it is now, even if the situation of the sector improves significantly (as expected)? 12

Future considerations If the CFP is a success, then where is the need for public support? Need to look and focus into new or remaining market failures: innovation, control, data collection, etc. Should there be less measures in an EMFF-2? Simplification is always an objective and increased concentration of support fosters effectiveness and efficiency of public support. Need to further increase conditionality of public support. Ensure continued consistency of CFP tools with CFP objectives. Fully exploit and profit from synergies with other ESI Funds Moving away from grants to financial instruments? Increased scope and reach of public support as well as involvement of the private sector, in particular financial intermediaries. Helps to focus support on sound, viable projects. 13

Thanks for your attention! 14